Multi-business firms should design the task portfolio of their headquarters (HQ) and the way
HQ tasks are carried out so that net value creation results. While the strategic management
literature has emphasized such parenting benefits, less attention has been paid to the costs that
may inadvertently be caused by HQ actions. Using a simple game theory model, we analyze
the motivational costs that may result from HQ intervention in subunits. Along the lines of the
procedural justice literature, we identify the conditions under which these costs may be
influenced by the existence of fairness expectations among subunit managers. Our analysis of
the dynamic game between HQ and subunits has novel and non-intuitive results. For example,
we find that good parenting may involve forgoing opportunities for value-creation, and that
procedural justice systems may sometimes be counterproductive. Our findings contribute to
both the HQ and the procedural justice literatures.

The economic turmoil over the past decade has accentuated the focus on corporate risk management and organizational adaptability under turbulent market conditions. However, there is little empirical evidence assessing whether promoted risk approaches are in fact associated with favourable corporate risk outcomes. Here we introduce the concept of dynamic capabilities as firm-specific adaptation under environmental turbulence that avoids extreme loss situations and provides stable business development. We test the relationship between effective dynamic capabilities and corporate risk outcomes in two large samples over two 10-year periods (1991-2000 and 2001-2010) representing distinctly different macro-economic conditions. The analysis uncovers significant positive risk outcomes effects in both periods, which suggests that dynamic capabilities may serve as a conceptual foundation to better understand effective risk management practices.

In this exploratory study we take a strategic management approach to global sourcing of
advanced services. We discuss in which ways conventional sourcing differs from strategic
sourcing and what impels firms to aim for the latter (or, prevent them from doing so).
Potentially, strategic global sourcing of services has high returns, but is also associated with
high risks and needs for organizational changes. Strategic global sourcing may therefore be
outside firms’ “comfort zone” – a composite of organizational knowledge transferability,
structural inertia, managers’ risk preferences, and – most interesting in a strategic
management perspective ‐ their ability to mitigate risks of strategic global sourcing. One
important risk reducing measure is internalization of (out)sourced service activities. Many firms
instigate global sourcing via conventional offshore outsourcing. However, as the human asset
specificity of the outsourcing operation increases, firms are pulled out of their comfort zones
and a desire for internalization arises. An illustrative company case gives suggestions as to
how, in practice, internalization may be accomplished without losing valuable human assets
held by the local service providers.

In this exploratory study we take a strategic management approach to global sourcing of
advanced services. We discuss in which ways conventional sourcing differs from strategic
sourcing and what impels firms to aim for the latter (or, prevent them from doing so).
Potentially, strategic global sourcing of services has high returns, but is also associated with
high risks and needs for organizational changes. Strategic global sourcing may therefore be
outside firms’ “comfort zone” – a composite of organizational knowledge transferability,
structural inertia, managers’ risk preferences, and – most interesting in a strategic
management perspective ‐ their ability to mitigate risks of strategic global sourcing. One
important risk reducing measure is internalization of (out)sourced service activities. Many firms
instigate global sourcing via conventional offshore outsourcing. However, as the human asset
specificity of the outsourcing operation increases, firms are pulled out of their comfort zones
and a desire for internalization arises. An illustrative company case gives suggestions as to
how, in practice, internalization may be accomplished without losing valuable human assets
held by the local service providers.

Strategic responses to complex and frequent environmental changes must balance the tension between innovative opportunistic search and optimization of operating processes. The ability to survive and thrive depends on an ability to facilitate dispersed exploratory initiatives, test their commercial viability, and exploit the associated business opportunities. However, dispersion of authority requires coordination as well as empowerment calls for extended controls. Hence, there is a tension between the aim of avoiding diversion of corporate resources through tight control of plans and facilitation of decentralized autonomous initiatives searching for opportunities. This prescribes a strategy process that gives direction and forms structure while it at the same time enables innovative behaviors and entrepreneurial initiatives. To this end, the paper outlines an integrative model that combines centrally planned (induced) and decentralized (autonomous) strategy-making with interactive control processes. The strategy and management accounting literatures are synthesized to develop the theoretical underpinning for the model and its proposed outcome effects. It is argued that interaction control of central and dispersed strategy-making creates a dynamic system that drives organizational adaptation. The outmoded strategic control concept is revisited and updated for contemporary responsiveness needs under increasingly turbulent conditions. Finally, the paper lays out a method for an empirical survey-based study that can test the propositions from large-scale corporate sampling.

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This paper addresses a recent strand of offshoring research that concerns the processes of evolution and change that appear in offshoring partnerships after the launch of offshoring operations. Based on longitudinal case studies of offshoring of advanced IT and engineering services from Danish firms to Indian firms, I identify a process model with three stages that captures the evolution of the initial 1-2 years of the offshoring partnership. Overall, the data portray a rapid development of the Danish-Indian offshoring partnerships which show that once trust is established and offshoring firms gain experience, the offshoring firms will increase the sophistication as well as expand the range and volume of advanced work done offshore. The dynamics of the process therefore suggest that at a broader scale, advanced services offshoring will increase in the coming years.

Files in this item: 1

Corporate entrepreneurship is deemed essential to uncover opportunities that shape the future
strategic path and adapt the firm to environmental change (e.g., Covin and Miles, 1999; Wolcott
and Lippitz, 2007). At the same time, rational central processes are important to execute strategic
actions in a coordinated manner (e.g., Baum and Wally, 2003; Brews and Hunt, 1999; Goll and
Rasheed, 1997). That is, the organization’s adaptive responses and dynamic capabilities are
embedded in integrative structures that accommodate dispersed business initiatives. The dual
concerns for integration and entrepreneurial behavior are reflected in the conjoint need for
effective routines and exploratory search in adaptive systems (e.g., Pfeifer and Bongard, 2007;
Sutton and Barto, 1998). It has also been expressed as a need to balance exploitation and
exploration (March, 2001) and configure ambidextrous organizational forms (e.g., O’Reilly and
Tushman, 2008; Tushman and O’Reilly, 2004). In strategy research, optimization and rejuvenation
perspectives have variously been described as intended and emergent strategies (Mintzberg,
1978; Mintzberg and Waters, 1985), top‐down and bottom‐up strategies (Nonaka, 1987), induced
and autonomous strategy processes (Burgelman, 2005; Burgelman and Grove, 1996, 2007), central
planning and decentralized initiatives (Andersen, 2000, 2004, Andersen and Nielsen, 2009).
Burgelman and Grove (2007) outline such a combined strategy process and observe how central
direction and dispersed exploration can change over time influenced by strategic leadership.